ANTWERP, Belgium -- In what was once a predominantly Jewish neighborhood
near Antwerp's central station, young Indians in Armani suits haggle with
Hasidic diamond buyers in long black coats, side curls and skullcaps.
Hoveniersstraat, a street once celebrated for its kosher restaurants, now
offers the best curry in town.

The orthodox European Jews who established the world's most famous
diamond district are being supplanted by Indians -- who, among other
things, aren't required by their religion to close their businesses from
sundown Friday to sundown Saturday.

"Many of the Hasidim have failed to keep up with globalization," says
Ramesh Mehta, an avuncular diamond trader and one of the pioneers of
Antwerp's Indian community, who has helped 50 Indian families set up their
own diamond businesses here since the early 1990s.

Indians are among the world's most successful newcomers. They have
reinvigorated the jewelry districts in New York and Hong Kong and revived
the U.S. motel industry; they are among the programmers of choice in
Silicon Valley and Berlin. In the global diamond world, Indians have been
so successful that they are challenging Jewish dealers, even in Tel Aviv.
About 80% of all polished diamonds sold world-wide pass through Indian
hands.

Such a shift seldom takes place without some tension, and in Antwerp,
that struggle is happening now. Many Jews who used to trade diamonds in the
public hall of Antwerp's imposing Diamond Beurs are so worried about the
new competitive pressure that they now prefer to meet clients in the
privacy of their own offices for fear that Indians or other Jewish traders
will poach their business. Many have changed their manufacturing practices,
moving their cutting and polishing factories from Belgium to lower-cost
centers such as Thailand and China. And in the retail-jewelry sector, some
secular Jews are breaking ranks with the Hasidim and keeping their
businesses open on the Sabbath.

"The secular Jews are not enchanted when the rabbis knock on their doors
and tell them to shut down, but they don't listen," says Henri Rubens, a
Jewish community leader and former diamond trader, who is now in the
real-estate business. "Nor are the Hasidim enchanted by other Jews who put
business ahead of religion."

In Antwerp, Indians' share of the $26 billion-a-year (€22
billion) diamond revenues has grown to roughly 65% from about 25% in the
past 20 years, while the Jewish share has fallen to about 25% from 70%,
according to both Indian and Jewish consultants who study the
global-diamond trade.

The new economic power of the Indian diamantaires (as Antwerp diamond
traders are called) has spilled over to the U.S. diamond market. After
gaining a foothold in Antwerp, many of the Indian traders have expanded
their businesses globally, to include California and New York.

While the Jews try to stem their decline, the Indians are demanding that
their influence in the Antwerp diamond world mirror their economic might.
They want better representation on Antwerp's High Diamond Council, the
powerful body that regulates the city's diamond industry. In February, the
first two Indians were elected to the council's board of directors, but
many Indian dealers dismiss it as a token gesture -- the board has 20
members.

"We make up the bulk of Antwerp's diamond trade and yet have no voice on
the most important trade bodies in town," fumes Bharat Shah, an Indian
diamond trader. Peter Meeus, the council's managing director, says it is
working hard to change the institutional imbalance. "It takes time to
change old institutions, but there is always room for improvement," he
says.

The stakes are huge. Antwerp, a Flemish port city of 500,000 people
known for its hip fashion designers and conservative politics, is the most
important diamond-trading center in the world. About 90% of the world's
uncut diamonds, and half of its polished diamonds, are sold here each year.
The city, which even has a trolley stop called Diamant, is home to 1,500
retail and wholesale diamond companies and four diamond exchanges. One of
the oldest, the Beurs voor Diamanthandel, was founded by Jews in 1904.

A New Feel

On a recent day at the Beurs's expansive trading floor, dozens of
diamond sellers line up in front of long rectangular tables to present
their rough and polished gems. Sitting hunched over electronic scales,
wholesale and retail buyers from Tel Aviv, New York and London peer through
magnifying glasses at small piles of diamonds spread out over white sheets
of paper. Many of the traders bargain in Yiddish. Among the Hasidim and
Israelis are a number of non-Jewish traders -- but in a hall the size of a
football field, there isn't a single Indian.

"The Indians don't come here -- they are in their offices where the
really big deals take place," laments Yves Szerer, a dapper young Jewish
dealer.

Mr. Szerer entered the diamond trade a few years ago, though his
father-in-law, a former Antwerp diamond dealer, advised him to pursue
another career. He says he now wishes he had listened to him and remained
in the clothing business, his previous livelihood.

The Jewish diamond trade in Antwerp goes back to the 15th century, when
Jews expelled from Spain and Portugal settled in what is now Belgium.
Antwerp's Jewish population grew as Jews fled persecution in Eastern
Europe. The city lost 30,000 Jews to the Holocaust, and the industry all
but disappeared during World War II, but the population recovered. Today,
the diamond district has more than 25 synagogues and several Jewish
schools. Large groups of Hasidim assemble on Hoveniersstraat and talk into
their mobile phones, giving the neighborhood the atmosphere of a modern-day
shtetl -- a traditional Jewish village of Eastern Europe.

But more and more, it feels like Bombay. The Indian traders began
arriving in the 1970s, drawn by the lucrative diamond business and
Belgium's liberal immigration laws. They are also religious, practicing
Jainism, an Indian religion that emphasizes nonviolence, vegetarianism and
respect for all living creatures.

Mr. Mehta says Jain and Jewish cultures share qualities that make them
well-suited to the diamond business: Both value kinship, hard work and
cross-border networking, useful qualities in a global industry that depends
on wheeling and dealing. Most Jain businesses are operated by families
spread across the world. Many of the families come from Palanpur, in north
India, and share the surnames Mehta, Jhavari and Shah.

Across the street from the Beurs at the modernist offices of Diampex, a
diamond-trading company, Chief Executive Bharat Shah inspects a small pile
of rough gems. "I don't need a magnifying glass," he brags, running his
manicured fingers across what look like pebbles of glistening sand. "I can
feel the quality." After haggling with a Hasidic broker, he writes a check
and hands him a sealed envelope. "Mazel," Mr. Shah says -- the Hebrew word
for "luck." The expression is as good as a legal contract in the Antwerp
diamond world -- both Jewish and Indian -- and signals that the agreed
price is final and can't be altered.

Mr. Shah, whose family comes from Palanpur, set up his company in 1982,
after he heard about Antwerp's robust diamond trade from a fellow Jain who
had settled here. Back then, he had the equivalent of about €4
million ($4.68 million) in annual revenue; today it is more than
€35 million. Diampex has joint ventures with a broad network of
cutting, polishing and marketing companies in Bombay, New York, and Los
Angeles, nearly all managed by relatives.

Indians like Mr. Shah gained a commercial edge over the Jews by sending
their rough diamonds for finishing work to family-owned factories in Bombay
and the northern Indian state of Gujarat, where labor costs are as much as
80% lower than in Antwerp. Even after paying for transportation there and
back, the Indians made out better than the Jews, who until recently
polished and cut their diamonds locally. The reluctance of the Jews to seek
out lower-cost production sites was partly pride -- many considered
themselves artisans and were loath to have the delicate production process
performed beyond their supervision. It also was partly due to postwar
psychology: Many were Holocaust survivors afraid to part with their assets
or send very expensive valuables far away.

The Indians also proved canny at polishing and cutting the lower-quality
rough diamonds that Jewish traders typically overlooked, squeezing higher
profit margins than their Jewish competitors and pumping the profits back
into their businesses. "We turned cotton into silk," Mr. Shah says.

Mr. Shah notes that Indians have been trading diamonds for centuries.
India, where the world's first diamonds were discovered in 800 B.C.,
provided most of the world's supply until the 18th-century diamond rushes
in South Africa and Brazil.

Sharing Culture

In Antwerp, Jews and Indians are so embedded in each other's lives that
many of the Indian dealers speak Hebrew and Yiddish. It is common to see
donation boxes for Jewish charities in the entrances of Indian businesses,
and after a devastating earthquake in the Indian state of Gujarat in 2001,
Jewish diamond traders raised thousands of euros for humanitarian aid.
Jewish dealers know how to fix a good cup of chai, the sweet, milky tea
drunk by the gallon by Indian traders. Most traditional Indian weddings
have a special kosher section, and Mr. Mehta says he has lost count of the
number of times he has been lifted up on a chair at a Hasidic wedding. A
few years ago, there was even a marriage between an Indian girl and a
Jewish boy -- though such close ties are rare. "We are not a very free
society and they are not a very free society, so we have a lot in common,"
Mr. Mehta says.

Isaac Keesje, a Jewish diamond dealer who has been in the diamond
business since the 1950s, says the two communities are bound by a common
entrepreneurial spirit and a strong moral code. A religious Jain is his
most trusted business partner. "We don't play golf together or go to each
other's houses, but we keep tens of thousands of dollars worth of each
other's diamonds in our safes and we haven't bothered writing a contract in
nearly 30 years. I only hope my son has a business partner who is such a
mensche," he says, using the Yiddish word for a good human being.

Still, some Jews wonder if pressure from the Indians signals the
beginning of the end of Antwerp's Jewish diamond district. In the past few
years hundreds of Jews have abandoned the trade altogether. Mr. Rubens, the
Jewish community leader, thinks it is unlikely the Jewish diamond trade
will experience a revival. "We were too complacent. Now that we realize it,
it's too late," he says.

Mr. Mehta says the Indians are philosophical about their success. He
says this is partly because of their strong belief in the Hindu notion of
karma -- the idea that destiny is determined by a person's actions in a
former life. "If we do badly in business, we blame it on bad karma," Mr.
Mehta says. "Bad karma is almost impossible to break -- just like a
diamond."